how do you keep an older car running like new? you ask a ford customer. when they tell you that you need your oil changed you got to bring it in. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car here to the ford dealership for service instead of any one of those other places out there. they are going to take care of my car because this is where it came from. price is right no problem, they make you feel like you're a family. get a synthetic blend oil change, tire rotation and much more, $29.95 after $10.00 rebate. if you take care of your car your car will take care of you.

i like to say there's always a bull market somewhere, and i promise to try to find it just for you right here on "mad money." i'm jim cramer, and i will see you next time. good evening, everyone. i'm larry kudlow. this is "the kudlow report." we are going to sizzle with some sequester scare tactics tonight. it's all a lot of bunk. first they told us budget cuts

would hurt the recovery. then they told us they would compromise border security. now attorney general eric holder urns warns we could see crime running rampant in the streets. and finally, nancy pelosi says these budget cuts are like a childish tantrum. >> it's frivolous. it's irresponsible. it's immature. and it is not in the interest of growing the economy of our country. >> okay. fine. but you know what? it doesn't really matter what they say because the sequester is going through in two weeks. trust me on that. and we have crunched the numbers, and the sequester only cuts 1.2% of the spending for the whole year. that's it. 1.2%. but guess what? cutting the growth of government spending will help this economy, not hurt it. "the kudlow report" begins right now.

of. and we have a very special on-set group with us tonight. i am totally surrounded. it is ladies' anytime. we have "time" magazine's ra rana faruhar, reason magazine's kathy mangle ward, katie burk, and hollywood star and town hall columnist morgan brittany. oh, my gosh. i don't know how i'm going to do this. first up, let's get the latest on the sequester scare tactics hysterics. i'm not hysterical, but our own hampton pearson joins us now with all the details. good evening, hampton. >> good evening, larry. all week long the senate appropriations committee among others has been hearing sequestration horror stories from major government agencies. here are the highlights from the doomsday scenario for the justice department as outlined in a memo from attorney general eric holder. march 1st sequestration would trigger a $1.6 billion budget cut with nationwide consequences for administering justice and fighting crime, says the attorney general. for example, cutting nearly 2,300 fbi employees, including

775 special agents, furloughing 5,100 u.s. marshals for two weeks would reduce the capacity to apprehend violent fugitives, sex offenders, and protect witnesses and judges. u.s. attorneys could handle 2,600 fewer cases than last year, reducing the ability to collect billions of dollars owed to the government. the attorney general emphasizes in that memo sequestration is not just a cuts in washington phenomenon. now some of the doomsday scenarios we heard this week may get a more immediate reaction from lawmakers and citizens. yesterday homeland security secretary janet napolitano said if sequestration lasts more than a month and there are forced furloughs of airport security personnel and air traffic controllers, the start of the spring travel season could feature nightmarish delays and long lines at the nation's major airports for international and domestic travelers. meanwhile, leaders of government employee unions are going to be spending a big part of there president's day weekend getting

out the ward to their members about furlough policy as spelled out by omb, the office of management and budget. larry? >> all right, hampton pearson, you ran that down beautifully. thanks. now, folks, look at this. even some of the local papers with liberal editorial pages are picking up on this doomsday hysteria. the "hartford current" today cites one expert stating, "the predictions of gloom are subject to hyperbole and political calculation." right on. so is anybody watching really truly want to cut the growth of spending or, heaven forbid, the level of spending? let's talk. joining us now is cato institute's senior fellow dan mitchell. 1.2%, dan, out of what, a $3.6 trillion budget? they can't even get this done? what's going to happen here? >> i guess the world's going to come to an end. i guess we might as well stock up on abottled water, canned goods and ammo. here's the number that jumps out at me to show how absurd this

is. over the next ten years if we have a sequester instead of the federal government going 2.5 trillion guess, what it's going to grow 2.4 trillion. i'm having heart palpitations. i don't know how the federal government can survive if it only grows 2.4 trillion. the most amazing story, i mean, you had some great ones there, but the navy claiming that it won't be able to fuel its aircraft carriers. all of these bureaucrats in charge of these agencies should be told that they will get fired if they can't manage to adjust their budgets and run their agencies after they have basically a fingernail clipped off their budget. >> all right. let me go to morgan. what's your take on this? you've heard all this rhetoric. president obama. sudden harsh arbitrary cuts will jeopardize military, slow recovery, and cost us thousands of jobs. so morgan, what do you make of that? >> haven't we heard this all before? we've heard this all before. they scared us before the

election with the fear tactics about women. they're going to take your birth control away. they're going to take abortion away. it's always fear tactics with the left. always. and the thing is if the republicans do not stand strong the ball is in their court. they're holding the cards. if they flinch and they let this go, the opportunity -- >> the base will walk away. >> base will walk away. >> the base will walk away and the party will self-destruct. it's split so badly. it will self-destruct. >> look, we need to have cuts. some way. this way they are guaranteed to happen. >> these little puny nothing cuts. rana, what's your response to this? you're on, shall we say, the other side of the street. what is your response? >> i'm going to shock with you and agree with you that sequester is not going to be as big of a deal as it's been made out to be but not for the reasons you think. we're only going to see these cuts in play for a few months until we get a new federal budget for 2014, which is hopefully going to happen in may. if we come to gridlock request

that the sequester's not going to be a big deal because we're going to be seeing a government shutdown and that's what everybody's going to be paying attention to. but there's a second reason. that's that discretionary spending has actually been falling for the last few years. it was falling in 2011, fell if 2012, and in fact discretionary spending kulths for this year would actually not be much more than the jump we already saw the previous year. >> wake me when you get back to 2008 levels. that's what i really want. because all that stuff is crap. look, our associate budget director under reagan, i know how much crap there is in there. don't kid me. katie, the problem with this story, it's not bigger. the problem with this story, it's not bigger. they waited five months into the fiscal year. it isn't going to be 85 billion, la-di-da. it's actually about 45 billion. and actually, those alleged budget cuts get wiped out by the 60 billion we're paying for hurricane sandy. >> and even if, larry, you get rid of all the waste and abuse that they say is in the pentagon, you're still not going to make a dent in the spending that we need to to bring our budgets back under control. the fact of the matter is

president obama not only suggested but he insisted that this sequester become law. you now have democrats running away -- >> it was his idea. and we just clarified that. it was his idea in the first place. why is he trying to worm out of his idea? >> not only the president but the entire democratic party has this righteous indignation over sequester when in fact they were the ones pushing it in the first place. the house has twice passed bills that would bring reasonable spending cuts into law. the senate thus far, we have seen a complete vacuum of leadership. it's time, frankly, for everyone to come to the table and have a reasonable discussion about what meaningful spending cuts would actually take to pass into law. >> catherine, i just want to get your quick take as the libertarian in the group. we've got a little something for everybody here tonight. before i get back to my pal dan mitchell. as you look at this drama play out, what do you think about it? >> you know, i second the notion that if we're going to get this

histor hysterical, if everyone is going to lose their minds about it, it would be great if it was over bigger cuts. frankly both parties are terrible at cutting spending. there's no better record by republicans by and large. they're all like fat ladies on a diet to trick themselves they're not spending more. >> i'm still not convinced the republicans are going to go through with this. >> i'm not either. >> there's a part of me that's not convinced. dan mitchell, are you convinced? the republicans do nothing, it goes through. >> republicans do have the upper hand. unlike the fiscal cliff where obama could get a tax increase by doing nothing, republicans could get a little spending restraint by doing nothing. buts i worry as your guest from "time" magazine pointed out there's not one, there's two opportunities for republicans to fumble away this victory. first where the continuing resolution expires zme dot rest of the budget for fiscal 2013 and then when they dot

appropriations for fiscal 2014. and we've already seen the republican house appropriations committee chairman saying he's going to put spending higher than the sequester level. so it's up to boehner and cantor and the rest of the gop leadership to say no, we're actually going to make sure that we don't have ever-growing government. so perhaps we won't wind up -- at least as fast as we think. >> this is a big political problem. if they don't have the courage to stay on track with these minuscule budget cuts, i say again, the gop, which is in a lot of trouble politically as it is -- i understand now the party will rip into the tea party folks and the hardcore folks, they will just walk out and they'll have no choice. that's the big issue. >> they can't keep kicking the can down the road. they can't keep doing it. i mean, how many times, how many times are they going to cave in to all this that's going on? it's ridiculous. we have got to stand for something. or we stand for nothing. i mean, the republican party has, like i said, the ball is in

their court, and i'm telling you, obama thought that the republicans were going to blink about the military spending. the defense cuts. >> but they know they can figure -- they can refix that in the appropriations committee. dan mitchell, thank you, buddy. i'll tell you one thing on the way out. i think lower spending as a share of gdp is pro growth. >> that's what we got with clinton. >> that's what we got with clinton. he took spending from 21% to 18%. we had an economic boom. milton friedman was right. that's why the gop should get wise and label this an economic growth measure. dan mitchell, thank you very, very, very, very much. now, folks, another question. does welfare really help the poor? we're going whole hog tonight. we got a blockbuster new report that shows welfare actually hurts the poor. that's next up. and later, did you see this? it's a massive meteor strike in russia, leaving hundreds injured. scientists say the impact was similar to a nuclear blast. we're going to have the latest on that. please don't forget, free market

capitalism, not welfarism, is the best path to prosperity. it is ladies' night on "the kudlow report." and i know in their hearts they are all free market capitalists. i'm kudlow. we'll be back. ♪ oh, yes it's ladies' night ♪ oh, what a night ♪ ♪ ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting?

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did you know that more than 46 million americans are living below the poverty line? my next guest says the primary reason for elevated poverty is because of new and generous government benefits. the handouts are actually increasing the number of poor people. here now is casey mulligan, professor of economics, university of chicago, author of the redistribution recession. casey, welcome back. so -- >> thanks, larry. >> -- we are essentially paying people not to work. is that the basic story? >> right. a lot of benefits reward those who are not working or working less. they reward the poor. and that's helpful to some people for sure. but when you pay poor people, you're going to have more of them. when you pay unemployed people, you have more unemployed people. >> all right. so what do you say to my liberal

friends? i've got at least one here at the table. >> i'm glad you're calling me a friend. >> always. always. casey, what do you say to liberals who say they need this, this is a safety net, this is because of the recession? i think we have another chart that shows how the percentage of poverty people have gone up, too. is this just a recession or is there more to it? >> you know, we had a safety net before the recession. and it was kind of the outcome of balance. president clinton worked on it. president bush worked on it. we had i asafety net there. and we could have experienced our recession and that safety net would have been there to help people. but what's happened is there's been a new set of rules. there have been people allowed into the safety net who wouldn't have been allowed under 2005 rules or 1995 rules. they changed the rules and that lets a bunch more people in and really increases the penalty on success and the penalty on hard work that was already present. >> katherine, haven't we in fact -- casey's got a great

point. it's been made by richard vedder and other distinguished people. we have not only paid them because of the recession. i don't have a problem with that, to tell you the truth. but we've opened up the eligibility. some of the leading areas here, food stamps, disability payments, pell grants, extended unemployment benefits. we have opened up the eligibility, and they've taken advantage of it. >> you know, there's some point where we're going to have to decide between a real safety net for people who are in genuine need and in genuine danger and ongoing ever-expanding entitlements. and that's we're out of money, we're going to have to choose. every time we add a new entitlement, every time we say more money for college, more money just for being old, we say to the people who really need the safety net, you're not the people that we value. and i think that that's a huge problem. >> that's where the bankruptcies come from. that's really the heart of bankruptcy. morgan, let me ask you this. mitt romney said 47 million people -- 47 million americans were dependent on the government. he said that during the campaign. and he was mocked and attacked

and vilified. but he was right, wasn't he? >> of course. of course he was right. >> why did he back off? why do you think he backed off? because he could have made the point that katherine just made and that casey mulligan just made, that we are giving incentives for the poor, which is all wrong, and we are increasing the eligibility of the poor. so we're getting more poor. >> i know. i don't understand. i don't know why the republicans don't stand up and defend themselves. i don't understand it. they back off every time they get hit. every single time. i'm getting really tired of it. because we need to answer all of this. yes, there are people -- this is terrible when you've got this many people living below the poverty line. and when people would rather get unemployment benefits because if they went out and got a regular job it pays less than their unemployment insurance, we are in a bad state. >> katie, as a long-time republican strategist and so forth, why does the gop back off when this argument comes up?

>> well, i mean, look, there's fear-mongering always from the left. and it's a difficult argument to have in the midst of a heated campaign. because you know exactly where the left is going to go. when you start to raise these very real issues. you know, at the end of the day, larry, i think that -- i'm pretty old-fashioned when it comes to welfare and the like. i think good hard-working people want to work. i think they want to be incentivized to work. but when the incentives are so disproportionate to the rest of the system, it just doesn't make sense for people. people are making this calculation. they're smart enough to figure it out. so let's relook at the system. let's have the conversation out in the open. and let's all figure out a way to solve it. right? people want to work at the end of the day. we've got into cent vooiz them to do it. >> i think people do want to work. i agree with that. but i think it's important because of that to change the frame a little bit and say why aren't people working? they're not working because every recovery since the early 1990s has been slower and weaker than the one before. and why is that? i'm going to mention a study

that was done by a nobel laureate, michael spence, for the council on foreign relations because there has been no net new job creation in basically every sector of the u.s. economy that has been exposed to foreign competition since the 1980s. that's why we have a poverty problem -- >> i'd have to check that -- >> you can check that. >> we had phenomenal job creation in the '80s -- >> no net -- >> democrat bill clinton. democrat bill clinton worked with republican newt gingrich to change and reform the welfare system so we put limits on the length of not working. now, under obama, unfortunately, i regret to report, many of those limits have been removed. and that is part of the eligibility issue that casey is talking about. casey, if we take away the limits, then we take away the incentive to get off the dole, don't we? >> yeah. for the group of -- there's a large group of people who would really have to take care of themselves if we went back to old-fashioned rules of 2005 or

so. >> and we're going to have to change the tax code, too. because it's a hard marginal tax rate. if you go from non-work to work, your tax rate goes up, and in many cases that's a disincentive. just real quick, i'll give you the last word on taxes. >> yeah. the earned income tax credit's grown quite a bit, and it combines and reinforces what these other programs like unemployment insurance, and i've found literally millions of situations where i think one of your guests mentioned people can make more, the combination of tax breaks and unemployment insurance and food stamps than they would from a pretty decent job. >> we're going to have to get out of that. casey mulligan, thank you very much. up next, folks, a leaked internal e-mail from walmart shows a disastrous drop in february consumer spending. what's this say about the rest of the economy? we have the latest on that one and a roundup of the day on wall street. and don't forget, our all-star panel is still with us, including morgan brittany. i am surrounded by ladies. they're all very smart. this story's not over yet. please stay with us. >> well, i'll tell you this.

it's not over yet. ♪ >> she has a nasty temper.

how do you keep an older car running like new? you ask a ford customer. when they tell you that you need your oil changed you got to bring it in. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car here to the ford dealership for service instead of any one of those other places out there. they are going to take care of my car because this is where it came from. price is right no problem, they make you feel like you're a family. get a synthetic blend oil change, tire rotation and much more, $29.95 after $10.00 rebate. if you take care of your car your car will take care of you.

that's not much, you think. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low. it's guidance on your terms, not ours. e-trade. less for us. more for you. it's guidance on your terms, not ours. all right that's a fifth-floor probleok.. not in my house! ha ha ha! ha ha ha! no no no! not today! ha ha ha! ha ha ha! jimmy how happy are folks who save hundreds of dollars switching to geico? happier than dikembe mutumbo blocking a shot. get happy. get geico. fifteen minutes could save you fifteen percent or more. all right. the s&p 500 closes the week with a small gain. that makes seven weeks in a row.

markets mostly flat on the day, but there was some extra excitement thanks to walmart. our own cnbc's jackie deangelis has that hot story. good evening, jackie. >> good evening, larry. well, reports of walmart's weak february sales weighed on the dow. in fact, it was the dow's second straight weekly loss. meantime, the nasdaq finished the week marginally lower as well, ending its 2013 weekly win streak. the nasdaq also announcing that it's looking to extend premarket trading sessions to begin at 4:00 a.m. but as you mentioned, the s&p 500 was up for the seventh straight week. and one of the biggest winners for the week was heinz. yesterday warren buffett's berkshire hathaway announced it's buying the company for more than $23 billion. but today the s.e.c. froze assets in a swiss-based account on suspicions that it was used to make $1.7 million in profits, buying heinz optioned before the deal was made public. and check out this amazing video. a meteorite streaking across the sky. it exploded over central russia

earlier today, damaging buildings and injuring 1,200 people. the meteor was traveling at 19 miles per second and weighed around 10 metric tons. another space oddity, an asteroid passed earth at 2:24 p.m. today. scientists were watching for the 2012 da14 asteroid all week, but it never got closer than 1,700 miles from earth. while nasa was monitoring the situation closely, star gazers in australia, asia, and eastern europe were actually able to see the asteroid with bin oculars and telescopes. and that was 17,000 miles. excuse me. >> that's what i was going to ask you. did you duck, jackie? 17,000 miles. that was a close call. jackie deangelis, thanks very much for helping us on a friday evening. so, folks, is the obama administration openly break breaking the law? the president's recess appointments to the national labor relations board were deemed unconstitutional. that by a federal appeals court in washington, d.c. so why are this union-friendly board even in business right

now? seems like a slap in the face. and our guest morgan brittany knows all about that union story. please stay with us. we'll be right back. >> i've been in love with bobby from the first time i saw him. and i've loved him ever since. pam, and i'm going to have him too. >> listen to me. you may be my sister, but i never want to see you again. look, if you have copd like me, you know it can be hard to breathe, and how that feels. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours. plus, it reduces copd flare-ups. spiriva is the only once-daily inhaled copd maintenance treatment that does both. spiriva handihaler tiotropium bromide inhalation powder

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welcome back to "the kudlow report." i'm larry kudlow. in this half hour, just how much are gas prices and higher taxes hitting the middle class? well, a lot if a catastrophic internal walmart e-mail is true. but first, one month after the influential d.c. federal appeals court struck down the president's nrb recess appointments that board is still in place and it's still chock full of pro-union agenda folks. so we asked what damage can the nlrb do while they are sitting there illegally? here now is former nlrb chairman peter scham behr. that's the national labor relations board. peter, that's my first question. this is in a sense a rogue

board. that court said the recess appointment was unconstitutional. everybody knows the supreme court's going to back it up. what are they doing? why are they meeting? zblar kind of thumbing their nose at the court. their decision to continue issuing decisions is pointless because any party can bring a board decision to the d.c. circuit and the d.c. circuit will nullify it on the courthouse steps. you know, and it's also, larry, really inconsistent with the interest of the parties. why should anyone have to spend time and money litigating before a board when whoever loses can have the decision litigated? think about a worker who -- they voted for the union. they're looking forward to having a union. and all of a sudden their vote disappea disappears. it has no effect. this could result in frustration amongst rourkers. it could result in labor unrest. >> labor unrest can result in business unrest because this board is so totally pro labor, it's pathetic. in fact, one of the people that was appointed legally or unconstitutionally, this guy

richard griffith, this guy's from the operating eernlgz engineers, for heaven's sakes, he's under a rico indictment and he's signature on the labor relations board. i have to love that. obama's got his guy up there. not only is it unconstitutional on the recess appointment, but this guy's up on a rico indictment charge. now, i want to ask you about something else. what kind of damage are they going to do? for example, some of the pending issues on this board have to do with the timing of union elections, trying to get it done lickety-split so business can't react. can they get away with that? >> you know, i don't think they're going to issue any major decisions like that. because it will be nullified by the d.c. circuit. but to answer your question, there's a potential for that. they could shorten the time by decision between a pet sxigs an election. they could also, for example, say that workers can use the employer's e-mail system for union activity. you can imagine what impact that would have on order in the workplace. these are some of the issues pending. >> this would make a great sequester budget cut. it's really a pity that they didn't just put the whole nlrb

right under the sequester. last one, peter, we appreciate your time as always. can they do any harm to paycheck protection? the whole issue of right to work that you don't have to pay union dues if you don't want to. >> is that a question for me? >> it is a question for you. you're the only living human being who can answer that question. >> oh, i'm sorry. they can't do anything with regard to right to work. that is a statutory provision. states can pass right to work laws. and really the board can impact on that. >> peter schaumber, thank you very much. let's stay on the whole union issue. unions want president obama, unions want president obama to approve the keystone pipeline. could create thousands of jobs. the president, on the other hand, stuck in the middle between the greenies and the hollywood activists and the unions. my pal byron york wrote a great column about this today in the "washington examiner." and i want to go to morgan

brittany because you're talking about hardcore blue-collar union workers who desperately need the job. hundreds and hundreds of thousands of them lost their jobs. on the other side you've got the hardcore greenies and i'm sorry, but you've got the -- >> hollywood. >> -- the hardcore hollywood liberal lefties. what is this all -- is obama going to dare bash the hollywood lefties and do something sensible for a change by okaying keystone? >> well, i'll tell you one thing. i think he's much more likely to be forgiven by hollywood than he is by the unions. so inevitably, i believe that something will happen that he will appease the unions because he can't afford not to. >> you think it's going to go the union way. that's very interesting. >> i think it might. because the fact is hollywood, like i said, they're very forgiving. they love him. they do. no matter what he does, they love him. so i'm inclined to believe that i think the unions have got more

muscle here. even though the unions are losing their power in this country. >> they've got nothing in the private sector. but this is just real quick. i want to get your position on this. teamsters, electrical workers, laborers, sheet metal workers, bridge structures, ornamental and reinforcing ironworkers, those are the unions. these are unions who want this keystone pipeline to go through and have been fighting obama tooth and nail and fighting hollywood and fighting the greenies. what's your take? you think obama has the courage, the backbone, the cojones to go against hollywood and the greenies and actually do this keystone think to help america and get it back to work? >> i'm going to agree, actually. i think he probably does. i think what we've been hearing since his re-election has been very pro labor. and i think the whole manufacturing strategy -- >> the state of the union. never mentioned keystone in the state of the union, which was pathetic. >> but you know what he did say? he talked a lot about manufacturing. bolstering manufacturing in this country is largely about exploiting the north american

energy boom. and i think the keystone -- >> you know, when he says manufacturing, katie, he's thinking about solar, windmills -- >> oh, no way, larry. >> he's thinking about battery companies that we subsidize -- >> 1% of the energy portfolio. >> his view of manufacturing is much different than my view of manufacturing. is it different than your view of manufacturing? >> it is. and i think if you look at the president that we saw during the last bits of the campaign when he started to sound like a texas republican when it came to drilling and expanding our energy independence it's quite at odds of where he is today, sort of caught between his two lovers, on the one side we have the environmentalists and on the other we have labor. i ultimately think he's going to move forward with it. i hope he does. we need the jobs. the unions are pretty clear that this country needs those jobs. and frankly we need to move in the direction of more energy independence, larry. >> how about this? this is a little machiavellian, which is why i love it. it's very cynical politics. he goes for the keystone

pipeline. in return, either for a straight carbon tax or some kind of baloney cap and trade and tax plan. in other words, he won't go, what you said and what you -- he won't go straight into the enviros and the hollywood crowd. and i don't think the hollywood crowd's as tough touas the envi. but he gets something in return, we're going to tax carbon, put a million people out of work that way, put the coal industry out of work. is that what's brewing? >> congress seems to dysfunctional right now. it's hard to imagine you could brew such a deal these days. it can't be done entirely by executive order. getting everybody on board and getting them to stick to the deal seems almost impossible. >> even though he said he liked mccain-lieberman. and that was the old cap and trade and tax bill. i mean, i gulped in that. i had to really -- sucked it in when i heard that. because i thought that thing was dead and gone. >> that was the only point in his speech where he used the word "market." it was with reference to the cap and trade bill. and i was like weeping tears.

>>. >> weeping tears. >> anybody who thinks he can go up against a union of big oil and big labor is frankly delusional. >> that's a very good point. we're going to leave it there. don't freak out, folks. when you have a mediocre 2% economy, things like higher gas prices and tax hikes can really hurt consumers and businesses. walmart, apparently, having a disastrous february. we have the latest on that story just ahead. surrounded by ladies. i wonder if any of them shop at walmart. i'm going to ask them that too.

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retailer walmart, reports coming in their february sales numbers a total disaster. cnbc's courtney reagan joins us now with the details. good evening, courtney. >> good evening, larry. dow component walmart and other retailers moved sharply lower after a bloomberg report citing an internal e-mail from vice president of finance jerry murray to other executives saying february month to date sales are "a total disaster and are the worst start to a month in my seven years with the company." executives paying higher payroll taxes and delayed tax returns. we've reached out to walmart and received this statement in response. "as with any organization, we often see internal

communications that are not entirely accurate that lack the proper context and represent individual opinions. we will release our foerth quarter earnings on thursday, february 21st, before the market opens. now, trading in walmart shares more than double average daily volume today. walmart shares fell sharply, though began 20 come a bit back. walmart investors have been concerned about the retailer's consumers feeling pinched since the company started rementioning the prominent paycheck cycle a couple quarters ago. add in the payroll tax increase, higher gas prices, and walmart's february sales become even more in focus for wall street. we'll know for sure on thursday morning. larry? >> all right. many thanks. cnbc's courtney reagan. let's talk to joe lavorgna, deutsche bank chief economist. our panelist here, rah nah foroohar. >> you got it. >> morgan brittany. and kathy mangu-ward. good to see all of you. is this warmt catastrophe going

to be apocryphal? tax hike from payrolls. higher gasoline. we get late refund payments, joe. what's the deal here? >> larry, certainly something to bear watching. walmart's a very important company. they account for about 40% of retail sales, which account for about 30% of consumption. so clearly they're important. anecdotally it's interesting but if these are the worst sales in seven years that's really not that bad because those six was a decent year for growth. housing was still peaking. i'd be more concerned if they said it was as bad as what they'd seen during the downturn. i don't know if it's company specific. i don't know if it's related to the tax rebate. all i can tell you is the data don't look as bad as i would have thought a month ago. >> they don't look great. i know you're an optimist. i'm an optimist. but retail sales are kind of crummy. retail sales were kind of crummy. >> i don't think they were -- >> consumer sentiment was okay today in the report. but it's still below where it was in the fourth quarter. i can't give you the whole ship here. these walmart guys, he this know

what they're doing. >> they do. but here's the thing. as you know, these data are incredibly volatile. and what we've seen pretty much across the board, whether it's employment or retail sales, we tend to see big upward revisions. and this january print is not over. what i will tell you is if you look at the numbers in november and december, they were up about a 9% annualized rate. so i don't think the story's over yet for the consumer. >> when was the last time you were in walmart, joe? >> larry, my wife does all the shopping. i'll have to ask her. >> that is a copout. that is the biggest copout i have ever heard. >> that's not the biggest, larry. i know you've heard bigger ones. >> no, that is one of the biggest copouts i have ever -- that was a papa bush type copout, with the loaf of bread -- or no, what is it? a little container of milk he couldn't quite figure out. joe lavorgna, you're great. thanks a lot, buddy. we're still here with our special ladies' night free market panel with us. we're going to talk about the president's underwhelming

anti-growth and divisive state of the union speech. i want you to stay with us. but hold on, don't cut me off yet. i want to know around this. you've been to walmart. good or bad? thumbs up or thumbs down with walmart? >> i like the big ones with the guns. >> you do like them. >> absolutely. i like the greeters at the dor. absolutely. they're wonderful. >> we do have some time. first of all, you've been to walmart. >> of course. >> i've been to walmart, too. the one in norwalk, connecticut. it's not great. but it doesn't have those automatic weapons that katherine was talking about. now, from your vantage point which let slip by, e-mails, do you think things are going down here? there was a tax hike. payroll taxes went up. tax refunds are going to be late because of the whole issue of the fiscal cliff and so forth. how much trouble do you think we're going to have? >> i've been pleasantly surprised so far. i thought we were going to see a bigger hit from the payroll tax shift. the consumer's been very robust. we talked about that. you talked about that on this

network a lot. i'm surprised. i'll be really interested to see if other retailers follow. and once we see the february numbers in, if there really is this kind of a downturn. but i don't think so. i think the consumer has been pretty robust. i think the jobs numbers are still looking pretty good. and i think we're going to be in okay shape. >> you know, it's interesting. greenspan was on the network today. maria bartiromo was interviewing him. morgan, let me just ask you. he said if the stock market holds up then a, the economy's going to hold up and, b, the consumer is going to hold up. now, i thought that was quite interesting. what's your take on that? how much do stocks matter nowadays? >> you know something? i am so skeptical about numbers. it makes no sense. the stock market being so high and the economy being in such a state that it's in. it makes no sense to me. so it's almost like what do we believe anymore? it's kind of like the numbers with inflation. they're telling us there's no inflati inflation. but i go to the grocery store every week, which is probably the reflection of walmart's numbers. everything's going up. milk is going up. bread's going up.

everything little by little. >> gasoline prices. >> gasoline. everything. >> big jump. food prices are going up. >> and we have no inflation? i mean, i'm tending not to believe the numbers here. so greenspan, i don't know. >> what do you think the influence of stocks are? half the households in this country own stocks. we kind of forget that. it's been very unfashionable, you know, to be an investor in the last five or six years. although we're getting close now to these five-year highs. do you think greenspan could be right? if the stock market stays up, the wealth effect kicks in and we won't have to worry about this catastrophic walmart story. >> you know, i guess i'm a little bit afraid that greenspan is right and that the political risks that we're seeing in the stock market could be the deal breaker, right? if congress continues to mess around and not pass budgets and be unclear about tax rates and other wise finagle. then we're going to -- you know, there's a potential that the markets will finally lose their patience. and if that's what brings us down, then all the more reason to see congress's approval rating go down to negative

numbers. >> do you seriously think that anybody out there, average person who shops at walmart, cares one hoot about something called a sequester or knows anything about the sequester? do you think they care about that stuff? >> i think they care about what they can feel in their pocketbooks. and i think that you asked about how much does the stock market matter. i think to most americans they still keep most of their money in housing. i think housing matters more. housing, fortunately, is on the upswing. stocks are on the upswing too but for different reasons, because the fed's been propping stocks up with their quantitative -- >> companies are make money. that's the thing. companies are making money. i agree with you about the overall numbers. companies -- this country has such a great free enterprise system that no matter what washington does, and washington's doing some bad things, somehow our companies, both large and small, survive. that's the great thing about this country. >> it is. but think about it. companies have restructured. they've cut back. they've cut jobs too.

so they're showing more profits. so you've got to look at it that way as well. >> you know what they had? companies had across-the-board sequesters. >> yes, they did. >> who does -- would obama discuss those as harsh arbitrary cuts? >> harsh arbitrary cuts. business has been through it five times in the last few years. i just thought about that. i'm going to write a column about that. companies have had sequesters. don't forget our special ladies' night. we're still here. free market friday panel. one last hurrah is coming up. we're going to get these ladies' take on the state of the union. good or bad? up next on "kudlow." she knows you like no one else.

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how do you figure that a freshman senator gets the economic pro-growth story so right while our second-term re-elected president gets the message all wrong? you know, mr. president, you're supposed to learn on the job. we welcome back to our panel rana foroohar. how did i do tonight? >> very good. >> morgan brittany and as always kathy mangu-ward. i want to read senator marco rubio's great line. best line of the night. "presidents in both parties, from john f. kennedy to ronald reagan, have known that our free enterprise economy is the source of our middle-class prosperity." and this whole speech was pro growth. question. where was obama on the growth issue? i didn't hear a single pro growth in an economy that you

yourself don't trust at all. where was he on that? >> no, he wasn't. it was the same old, same old, same speech we've heard a million times. there was nothing new in it. i was wanting to throw things at the television set because there were so many untruths in it. so many things that were false, that just didn't -- >> give me a -- what stands out? give me an untruth you particularly dislike. >> just that the economy is doing well. the economy is coming back. we're -- really? really? you ask the average person on the street how they're feeling about it. the pulse of america is not feeling good about this economy. and no matter what he says it's not happening. it's just not. i get so tired of hearing it. and it's the same speech he could have said four years ago. you know? >> we talked about no keystone, which is one of the great growth initiatives, so easy for him to do that. i don't know that he's going to do it or not. i know you guys think he might do it. but he wants to tax the wealthy. that was in the speech.

he will not let go of that. marco rubio called that an obsession. and i think it is an obsession. and i want to ask you, where does that get this country, taxing the wealthy? where does that get? >> well, it closes a little bit of the budget gap. and that is real. the taxes would help in that regard. but as republicans have said over and over it doesn't close it all the way, it doesn't begin to address underlying issues. the idea that obama is just kind of sitting there looking at the two ledgers. he's thinking, oh, my god, how can i make these two sets of numbers even vaguely resemble each other? and taxes sound like a solution -- >> taxing business. going after the oil and gas companies. right? big source of jobs. that energy sector is probably the single best point on the economic horizon in the last four or five years. it's been a miracle. and he wants to tax those guys. and then he takes credit for it even though it happened all on private land by private companies. he had nothing to do with it. but he's dragging his feet on opening up the fracking and the

drilling on federal lands, which is another pro-growth measure he failed to include. >> i think that we're actually going to see a lot of movement on fracking in the coming year. but going back to taxing -- >> on federal lands? >> i think we're going to see a lot of movement. but going back to your point -- >> on alaska -- i'm not letting you off the hook on this. because energy. he says he's for manufacturing. he says he's for energy. i think it's solar panels if you ask me. this is one of america's greatest industries right now. >> absolutely. i wish keystone would have gotten done. but to the point about taxing the wealthy, which is really crucial, i want to give you a statistic. 18 times in the post-war era we have raised taxes as part of a deficit reduction strategy. each time the market has gone up. >> not tax rates. >> by an average of 13.5%. so people might not like tax hikes. but markets do. >> all i know is during the great boom of the reagan and clinton years there were some small tax increases. most of them were revenue reform measures. but marginal tax rates came way down.

and in particular, and i'll give bill clinton some credit on this, the capital gains tax came down. working with newt gingrich. so i don't know. do you think -- seriously, from your experience, can we tax ourselves into prosperity? >> no. of course we can't. there's no possible way. it just doesn't happen. >> can we tax ourselves into a bull market in stocks, as rana's trying to persuade me unsuccessfully? >> i'll show you the study, larry. i'm going to send you a reading list afterward. >> it has been tried before. it's been tried so many times before. and it's just -- it just doesn't work. it doesn't happen. >> do you think -- serious, serious question. fewer people watched it this year than they watched it i guess going back to the year 2000. but putting that aside for a minute, do you think the average person watching that speech comes away with any more economic confidence? i'm asking a serious question. economic confidence from the state of the union speech? >> i don't. by don't think that was actually the point. the the point isn't to make

people feel confident about the economy. 9 point is to make people feel confident about president obama. >> the state of the union, not the state off bama. >> the thing that struck me on this front was most of the positive mentions of corporations in this speech were actually bids for crony capitalism. so he said let's have corporations help us build roads. let's have corporations help us fund schools. and with the implication they would of course be receiving some kind of consideration for that. >> i want to go back to marco rubio. the free enterprise economy is the source of our middle-class prosperity. that was a great line. >> but is he really going to -- >> i don't know if he'll ever have -- >> republicans always sound so good this time of year. >> this one sounds doable. all right. many, many thanks to our wonderful panel of ladies tonight. really putting me to the test. rana foroohar, brittany morgan, and katherine mangu-ward. i had to really work to get this through. you guys were great. you were knowledgeable. you didn't show me up too badly. and i appreciate it. that's all for this evening's show. have a great presents holiday

weekend. i'm larry kudlow. we'll be back on tuesday. try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable,